London

JLL comments on implications of the National Living Wage on UK care home operators

Today, the government announced the introduction of a National Living Wage (NLW), a premium minimum wage paid to workers aged 25 and above. Commenting on the implications for care home operators in the UK, Eamonn Meadows, Associate Director in JLL’s Healthcare team, said “The additional costs of a 6 percent per year increase in the NWL by 2020 will be significant for many businesses, particularly care home operators. Given restricted fee increases from Local Authorities (LAs) in recent years, against rising operational costs, many care home operators providing care to predominantly LA funded residents, are likely to have grave concerns at today’s announcement and raise questions as to how they will continue to make ends meet and continue to provide great care . This may have disastrous consequences for some if local government continues to restrict increases in fee rates. Improved wages for those working in the sector is to be welcomed but it comes at a cost which society should and needs to be prepared to pay.

“The recent report from the Association of Directors of Adult Social Services (ADASS) published last month highlighted forthcoming cuts and required efficiency savings for social services budgets amounting to £1.1 billion in the next 12 months. This suggests that commensurate fee increases with the NLW are unlikely for the foreseeable future."

Eamonn Meadows, added: “A rapidly growing elderly population, with increasingly complex and challenging needs, is leading to rising demand for all care services but with already stretched LA budgets and rising wage costs, the social services funded model of care is looking increasingly unsustainable.”